Thursday, March 24, 2011

Phillips-Van Heusen Corp. (NYSE: PVH): Q4 Earnings Preview

Phillips-Van Heusen Corp. (NYSE: PVH) is scheduled to release its fourth quarter earnings after the closing bell on Monday, March 28, 2011. Analysts, on average, expect the company to report earnings of $0.81 per share on revenue of $1.37 billion. In the year ago quarter, the company reported earnings of $0.61 per share on revenue of $614.85 million.

Phillips-Van Heusen Corporation owns and markets the iconic Calvin Klein and Tommy Hilfiger brands worldwide. It is the world's largest shirt and neckwear company and markets a variety of goods under its own brands, Van Heusen, Calvin Klein, Tommy Hilfiger, IZOD, ARROW, Bass and G.H. Bass & Co., and its licensed brands, including Geoffrey Beene, Kenneth Cole New York, Kenneth Cole Reaction, MICHAEL Michael Kors, Sean John, Chaps, Trump, JOE Joseph Abboud, DKNY and Timberland.

In the preceding third-quarter, the New York-based company reported GAAP net income of $80.7 million or $1.12 per share, compared to $83.6 million or $1.58 per share for the year-ago quarter. Excluding items, non-GAAP net income for the third quarter was $111.3 million or $1.55 per share, compared to $57.0 million or $1.08 per share in the prior year quarter. Total revenue for the third quarter more than doubled to $1.52 billion from $697.44 million in the same quarter last year. Analysts, on average, expected the company to report earnings of $1.43 per share on revenue of $1.44 billion.

In January, the company lifted its earnings outlook for the fourth quarter of fiscal year 2010, while reiterating its forecast for quarterly revenues. Further, the company projected fiscal year 2010 earnings at the high end of its outlook range and maintained its forecast for full-year revenues. The company said that it now expects fourth-quarter GAAP earnings of $0.69 per share, as compared to its previous guidance range of $0.63 to $0.68 per share. Non-GAAP earnings for the quarter is estimated at $0.82 per share, versus its previous guidance of $0.76 to $0.81. Phillips-Van Heusen continues to expect total revenue for the fourth quarter at $1.37 billion. Further, for the full year 2010, GAAP earnings is expected at $0.70 per share, compared to the prior guidance range of $0.65 to $0.70 per share. Non-GAAP earnings is now estimated at $3.95 per share versus the previous guidance of $3.90 to $3.95. The company reaffirmed its full year total revenues at $4.61 billion as compared to revenue of $2.40 billion in the prior year. Total revenue and EBITDA for 2010, adjusted to reflect, on a pro forma basis, results for company assuming the acquisition of Tommy Hilfiger occurred on February 1, 2010 are projected to be $5.24 billion and $773.6 million respectively.

The company has made significant progress in deleveraging its balance sheet since it bought the Tommy Hilfiger brand in May last year. Early in March, Phillips-Van Heusen announced that it entered into an amended and restated senior secured credit facility, which amends the credit facility it entered into in May 2010 in connection with its acquisition of Tommy Hilfiger B.V. and certain related companies. The amended facility provides reduced borrowing spreads and fees, as well as additional flexibility with respect to the application of voluntary prepayments. In connection with the closing of the amended credit facility, the Company voluntarily prepaid approximately $150 million of borrowings with cash on hand, which the Company had previously announced it intended to use for such purpose. 

Phillips-Van Heusen has over 100 different licensing agreements with a broad range of brands, from Valentino and Michael Kors Collection to Perry Ellis Portfolio and Jones New York. The company recently announced that it has licensed Arvind Mills Ltd. to manufacture and market men's, women's and boys' apparel and accessories under the IZOD brand in India, as well as in the United Arab Emirates, Kuwait, Bahrain, Qatar, Saudi Arabia, Bhutan, Madagascar, Seychelles, Oman, Yemen, Bangladesh, Nepal, Sri Lanka and Maldives.

The company's stock currently trades at a forward P/E (fye January 31, 2012) of 11.95 and PEG Ratio (5 yr expected) of 1.10.

Full Disclosure: None.
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